Crowdfunding, a very social way to raise money for a cause. Crowdfunding has been made very popular over the years from platforms like Kickstarter to GoFundMe. Crowdfunding has been used in the years mainly for raising money for medical aid, life-saving surgeries, political campaigns and relief funds for natural disasters. But crowdfunding is also a very critical tool in raising capital for a startup or new business.
When using crowdfunding to raise capital it is also advisable to view your contributors as partners as well. Why? Well because for one they are playing a very major role in the establishment of your business. Also, for their decision to donate to your cause, you should also view them as connections to a much wider larger consumer base. Of course once your business has been set up you will need consumers. These individuals can give of word-of-mouth referrals to their friends, families and colleagues.
In the society that we live in today, the importance of relationships are connections are more relevant than before. Use this factor to your advantage, and you cannot be sorry. When it comes to creating awareness for your cause you can always rely on these connections to push traffic towards your campaign and achieve your result quicker and with more consumer reach.
Still considering the option? Don’t! Act Now! Do you think Mira Mehta of the Tomato Jos campaign waited? I don’t think so too. She raised over $50,000 in just 31 days (from Oct 16 2014 – Nov 16 2014) on Kickstarter. Mira’s strategy was simple honesty, she told everyone what they needed to know about everything.
Crowdfunding as the name implies is get funding from a bunch of people, in fact a whole lot. You may not even know some of them, so you need your portfolio to be well arranged- dot all Is and cross all Ts
Crowdfunding cannot be done with skeletons left in the closet or with people being left in the dark. Once people perceive anything as shady, they begin to gradually lose interest in what you need funding for and that is the true beginning of the end.
BUSINESS PLAN COMPETITIONS
One very important aspect of entrepreneurship is that of ingenuity and innovativeness. As an entrepreneur in the seed or startup stage, what value is your idea/services/products going to add in solving the problem you have identified and how is that your strategy unique compared to others already in the business of solving that problem?
In the business world, competition is beyond mere dots, it is the survival of the fittest. For instance as a bank you offer what the next bank across the street is offering. How are you going to differentiate your services/products from that of your competitors?
If you can answer these questions but in need of funding you may consider the option of Business Plan Competitions and fortunately STARTUP COMPETE; THE AFRICAN INNOVATION PRIZE; IDB-BPCOMPETITION; TONY ELUMELU ENTREPRENEURSHIP PROGRAMME; SEEDSTARS WORLD and lots more are currently springing up in Nigeria and Africa as a whole.
However you will have to be conversant with the focus of these various organizations and stick to them while endeavoring to beat their various deadlines. Remember we promised to make available to you links to these platforms, stay with us to the end and enjoy the freebie.
A private placement is the sale of securities to a relatively small number of select investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds, insurance companies and pension funds. A private placement is different from a public issue, in which securities are made available for sale on the open market to any type of investor.
Private placement or private investment capital, is money invested in your company usually from private investors in the form of stocks and sometimes bonds.
This is usually non-public investment option as you don’t need to go through the Security and Exchange Commissions and in many cases, detailed financial information is not disclosed and the investment is not sold by prospectus.
So if you are not ready to raise funds via the stock market or go through the rigors of a public offer, you may find this fund raising option very interesting
You also have the option of raising funds under this option as debt, equity, or debt and equity capital combined.
Private Placement investors also would most likely contribute much more than funds and would be more patient with you as they are aware that their returns on investment is tied to how profitable your company is.
Though startups may still raise funds through this option but companies in their growth and matured stages are more likely to succeed with this option.
I won’t end this series without mentioning government programs and as such I wish to commend the Bank of Industry for their commitment to the various entrepreneurial programs they have kick started.
Some of these programs include
Also worthy to mention is the government’s intervention programs such as The Lagos State Employment Trust Fund (LSETF) with a proposed ₦25 billion fund to be given to support young entrepreneurs and small businesses over a 4 year period at 1%.
Kindly note that as a startup, having access to these funds are largely dependent on your business plan and traction, hence you must endeavor to operate a bank account as this is the only record acceptable presently for some of these funds.
Aside from bank loans which are not attractive to an average entrepreneur due to high lending rate even if he/she meets all the lending criteria, the Nigerian banks are yet to show commitment to SME in real terms other than mere nomenclature. However I wish to commend Diamond Bank for the http://portal.diamondbet.com.ng/register ; I also commend GTBank for partnering with https://sheleadsafrica.org ; also the value that https://sme.fidelitybank.ng/ is adding is highly appreciated.
However it is expected that the banks should consider a unique value adding product designed with SMEs in mind evidenced in interest rate offering instead of depending solely on federal government programs.
As an entrepreneur also note that having access to bank loans are largely dependent on your business plan and traction, hence you must endeavor to operate a bank account.
Ladies and gentlemen, this brings us to the end of our series, hope its been educative and rewarding.
As promised, fill the form below for the comprehensive four days lecture note to be made available to you together with the links for full funding opportunity.
Thank you and have a good night rest.